LR recognizes how undervalued Aurcana is at current prices. With really no debt and the expected cash flow, doesn't a buyback of shares make sense right now? Are they able to do this?? I have buy order in at .71 and hoping it catches some support at these levels. It would be nice if silver caught a bottom here soon... I am actually somewhat against the reverse split as I think it limits the upside. I think we could get $2-3 if we saw silver over $40 this year. Once we got a there I think a 2 or 3 for 1 split would make sense. Thoughts?
I pondered the same premise yesterday. Taking some of the profits and making a small buyback would go a long way in the eyes of many. But, that is a pipe dream. I feel that we could easily trade at 2 bucks with the current amount of outstanding shares, then split. There has to be "more here than meets the eye." This is a bad move being performed for a reason we cannot see.
The company is only sitting on around 25 million, but it is finally making serious $$$$. Both mines are built and operational, with over 300 employees......Plus the ramp to greater tonage is being done for pennies on the silver ounce! For now the company is better off making money, but if the price keeps falling irrationally, I am sure Lenic will announce a buyback as well. He has some other things cooking, but the bottom line is, we have two stud mines now, which can be expanded very very cheaply. In several years, the cost to build these two fully operational mines will be wildly prohibitive, but we are members of the club now, we are in. Little more in the way of capital expenses. From here on out, the economics of scale will work to the companies beneifit.
While I appreciate your sentiment and agree that this share price is absurdly low, given what they have going on...
it would probably be their worst move to buy back shares. Buy-backs rarely work to support the share price, and in this case, it would use precious cash-on-hand, which they are using to build the business (and they're doing that faster than just about any other miner I see, imo), AND, the cash insulates them against downturns and provides cushion, so that they NEVER again have to go to the equity market (dilution) to raise money.
I'd rather they grow another year, solidify their production and efficiencies, raise a pile of profits/cash, and in late 2014 institute a small but growing dividend to insulate against #$%$ shorts attacking the stock.
We all win HUGE from these levels if they just keep doing what they've been doing, imo.
I disagree that a share buy would be the worst idea, but understand you reservations for the most part. Buy backs do work, and would also reduce the amount of shares outstanding which is what they want, hence the reverse split. It would not take much capital and the return on investment would be great if you think we will win HUGE from these levels. I understand it would be nice to grow for a year first, but in a year Aurcana will not be this undervalued. A 2 million share buy back at 70 cents would go a long ways to give support to the stock, it would reduce shares outstanding, and only cost 1.4 million. I doubt they will do this, especially if they have any big moves coming in the near future.
Not a huge fan of dividends due to pending tax consequences, but perhaps in an Roth IRA account that would be nice. It would be nice to insulate against short attacks, but short attacks are what give us artificially low prices to make money from. Also, a good short squeeze can push the price higher than a stock could normally go on its own.